Share Crisis Latest: Shareholders’ Case Against Unity Bank Stalled

The suit instituted by aggrieved shareholders of Centre Point Bank Plc against Unity Bank of Nigeria Plc in respect of the merger arrangement that took place in 2005, has been stalled at the Federal High Court in Lagos, South West Nigeria.

The suit instituted by the former Chief Executive Officer of Centre Point Bank, Chief Dennis Onyemachi Odife and Amek Holdings Limited, the company appointed to represent the interest of shareholders, on behalf of the said aggrieved shareholders has been stalled since last month as the presiding judge has been appointed as a member of election petition tribunal in the Northern part of the country.

Although the suit was adjourned till 5 July this year, the court may still not be sitting as the tribunal will be in full swing sitting and in view of this, the shareholders are contemplating writing a letter to the new Chief Judge of Federal High Court, Justice Ibrahim Ndagi Auta, to reassign the case to another judge.

In a claim filed before a Federal High Court in Lagos, the aggrieved shareholders alleged that the defendants, who had already determined that any merging or acquired banks needed a minimum capital of N750,000,000 to secure a director’s seat, wrongfully and through devaluation of assets, suppression of facts and figure, deliberately denied the plaintiffs a representative seat on the board of Unity Bank Plc.

To achieve this, the defendants wrongfully understated and devalued some of the plaintiffs’ assets and excised others from the merger arrangement.

It was also averred that it was on the basis of the scheme of merger and more importantly, information provided in the court papers filed in suit FHC/L/CS/1198 indulging the wrong information, that the entire assets and liabilities of Centre Point Bank were acquire by Inter City bank Plc as acquiring bank under the scheme that the Federal High Court granted its order of 22 December, 2005.

The plaintiffs averred further that as part of its scheme to undervalue one of its assets, Centre Point’s head office at 497, Abogo Lagema Street, Central District, Abuja, the defendants deliberately misstated the date of valuation to be 2004 instead of 2003, in the scheme of the merger document.

The defendants incorporated this purported revaluation of this fixed asset in the financial records of the consolidated bank and thereby denied the plaintiffs a total value of N400 million which shares were not issued in their favour and which were entitled to Inter City Bank Plc renamed Unity Bank Plc, despite several protests.

The plaintiffs also averred that the defendants excised and did not take over the following assets of Centre Point Bank Plc, a loan of N872.5 million due from Ferchnand Oil Mills Plc, Centre Point Investment Limited, Centre Point Trustees Limited, Lagema Street Properties with its 14-bungalow housing estate in Nasarawa State and 12 plots of land located in various part of Abuja.

The exchange ratio of the merger was supposed to be eight shares of Unity Bank Plc for every ten existing shares of Centre Point Bank Plc, instead of the one share of Unity Bank Plc, exchanging for every nine shares of the defunct Centre Point Bank Plc.

Consequently, the claims of the plaintiffs against the defendants are as follows: A court’s order setting aside the approval of the scheme of arrangement for the Unity Bank Plc merger since it was obtained by fraud; an order amending the order of the Federal High Court that an order is made transferring and vesting in Inter City Bank Plc, all the assets, undertakings and liabilities of Centre Point Bank Plc; an order assigning a seat on board of Unity Bank Plc to a nominee of Centre Point Bank Plc with full rights and privileges, effective from the date of the merger and general damages in the sum of N500 million.

Joined as defendants are the Chairman, Alhaji Falalu Bello, Professor Akin Mabogunje, Kapital Insurance, Securities and Exchange Commission and Central Bank of Nigeria.